GrainCorp buckles to takeover bid

ALAN KOHLER, PRESENTER: It looks like the last big publicly-owned grain business, GrainCorp, is also heading offshore following the sale of ABB in 2009 and AWB in 2010 - both of those to Canadian interests. GrainCorp said on Friday that it had reached an agreement with the US grain trader Archer Daniels Midland to buy the business for $3.4 billion, or $12.20 a share plus a special $1-a-share dividend that'll come out of the company. So here's GrainCorp chairman Don Taylor selling the deal.

DON TAYLOR, GRAINCORP CHAIRMAN: Well the board has great confidence in our management team's ability to improve shareholder returns over the long term. It believes the proposal offers - the proposed offer is sufficiently compelling for us to recommend it to the shareholders, to our shareholders. We feel that the proposed offer is attractive and would in the be best interests of all our shareholders.

ALAN KOHLER: I find it interesting that the institutions here, they want - they're kind of piling money into - with superannuation, money's pouring into the sharemarket, but they're selling companies to overseas takeover offers quite readily.

PETER MORGAN, INVESTOR: I think it's getting back to what David Gonski highlighted not so long ago, is that the mentality in Australia is a lot more short term than it is with the pension funds of North America or even Europe. And I think a lot of it gets back to what you see in the paper everyday. There's performance tables on a quarterly basis or a yearly basis at best for fund managers and it's also feeding through to the superfunds themselves.

ALAN KOHLER: You're a fund manager. What sort of pressure were you under?

PETER MORGAN: Oh, enormous. I mean, if you had two bad quarters, you were in a lot of trouble. We all know if you pick up a portfolio today, the big fund managers - 50 to 75 per cent of those portfolios are just index-hugged portfolios where they're hugging the index and they're taking a risk with the other 25 per cent 'cause they're scared that the pressure on fund managers to perform on a short-term basis from the industry as a whole is enormous. It's completely different. And David Gonski's right: there's too much of a short-term mentality that is playing its part in all of this.

IVOR RIES, SENIOR RESEARCH ANALYST, WILSON HTM: Yeah, well, there was enormous pressure on her to accept the first Archer Daniels ...

ALAN KOHLER: From the fund managers.

IVOR RIES: From the fund managers. Admittedly, they're in there at $4 and $5, so they're making a swift turn. And if you're overweight in the stock, you wanted to accept so you can look great in the performance tables, don't you? And there was a lot of pressure on her and she said, "No, no, no, I understand that this business is worth more to the acquirer than it is to you guys," and she was right.

PETER MORGAN: Fund managers will say today that the share price since that first bid came along - sorry, the sharemarket since that bid came along's probably 30 or 40 per cent higher today. Maybe it would have underperformed by holding to get this result. And, i mean, that's the argument that'll be had. It's illogical on the longer term basis, but we're getting back to short-term sort of factors again.

ALAN KOHLER: She hasn't been there very long, has she, Adele?

ADELE FERGUSON, COMMENTATOR, THE AGE & SMH: No, she hasn't and she obviously knew what the share price was worth, but there's been a number of instances where companies have actually rejected a takeover offer hoping for them to come back and they didn't come back and they're get in a lot of trouble.